nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒03‒20
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Spatial Agglomeration, Innovation and Firm Survival for Italian Manufacturing Firms By Arnab Bhattacharjee; Ornella Maietta; Fernanda Mazzotta
  2. Firm Size and Financing Behavior during the COVID-19 Pandemic: Evidence from SMEs in Istanbul By Aysan, Ahmet Faruk; Babacan, Mehmet; Gür, Nurullah; Süleyman, Selim
  3. Self-Efficacy and Entrepreneurial Performance of Start-Ups By Marco Caliendo; Alexander S. Kritikos; Daniel Rodriguez; Claudia Stier
  4. State-Based Conflict and Entrepreneurship – Empirical Evidence By Wim Naudé; Lelys Ernesto Amorós; Tilman Brück
  5. Spatial concentration and firm-level innovation Evidence from Ghana By Anthony Krakah; Gonzague Vannoorenberghe
  6. Factors of regional development: theory, empirics, role of entrepreneurship By Akimova V.V.; Mikhaylov A.A.; Semyonova R.I.; Zemtsov S.P.
  7. Reassessing Women’s Participation in Entrepreneurial Activities in the Nineteenth Century: A Review of the Literature By Sonia Baijot; Charlotte Le Chapelain
  8. Back For Business: The Link Between Foreign Experience and Entrepreneurial Activity in Latvia By Kata Fredheim; Marija Krumina; Anders Paalzow; Zane Varpina
  9. Localisation economies, intellectual property rights protection and entrepreneurship in China: a Bayesian analysis of multi-level spatial correlation By Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu
  10. The Impact of the Organizational Design of Innovation Units on the Consideration of Cybersecurity By Heierhoff, Sebastian; Reher, Alina; Slamka, Jessica
  11. Predicting Firm Exits with Machine Learning: Implications for Selection into COVID-19 Support and Productivity Growth By Lily Davies; Mark Kattenberg; Benedikt Vogt
  12. Support for small businesses amid COVID‐19 By Goodhart, Charles A.E.; Tsomocos, Dimitrios P.; Wang, Xuan
  13. Navigating the internationalization process: Strategic resources for early internationalizing firms By Angélique Breuillot; Rachel Bocquet; Véronique Favre-Bonté

  1. By: Arnab Bhattacharjee; Ornella Maietta; Fernanda Mazzotta
    Abstract: Innovativeness of a firm improves not only its own survival chances but can also generate externalities on its neighboring firms. We empirically examine the role of agglomeration economies in how innovativeness affects firm survival in Southern Italy, using spatial weights to model spillovers. Spatial Durbin probit model estimates confirm that innovation is a determinant of firm survival not only for firms that are themselves innovative but also ones located close to other innovative firms. Definition of spatial scale and weight plays an important role. Spillover benefits are enhanced by agglomeration economies, but only at a very local scale.
    Keywords: Firm survival, Spatial models, Innovation, Spillovers, Southern Italian SMEs
    JEL: L20 O3 D22 C21 C41
    Date: 2023–02
  2. By: Aysan, Ahmet Faruk; Babacan, Mehmet; Gür, Nurullah; Süleyman, Selim
    Abstract: This paper examines how small and medium-size enterprises (SMEs) in Istanbul managed their financial needs during the COVID-19 pandemic. A unique survey was conducted in May–June 2021 to analyze the effect of the pandemic on financial conditions and access to finance. The paper maps the differences between firms in terms of their financing conditions and behavior based on their size during the pandemic. The novel data set helps to conceptualize the impact of the COVID-19 pandemic on SMEs. The paper makes a contribution to the literature through using a large number of variables related to firms’ financial conditions and opportunities (e.g., credit restructuring, debt postponing, capital injection). The paper hypothesizes that SMEs are less likely than large firms to access formal finance opportunities, but they tend to rely more on informal financing. The empirical findings suggest that, during the pandemic, micro and small firms tend to borrow more from their acquaintances, such as relatives and friends. Micro firms are less likely to restructure their outstanding loans, borrow from banks, or inject capital. Furthermore, micro firms tend to cut their costs more to avoid further difficulty in their financial positions. Micro and small firms tend to apply for bank loans less than large firms, while medium-size firms are more likely to apply. Micro and small firms are more inclined to report difficulty in accessing credit.
    Keywords: COVID-19, emerging markets, finance, small and medium-size enterprises (SMEs)
    JEL: D22
    Date: 2023
  3. By: Marco Caliendo; Alexander S. Kritikos; Daniel Rodriguez; Claudia Stier
    Abstract: Self-efficacy reflects the self-belief that one can persistently perform difficult and novel tasks while coping with adversity. As such beliefs reflect how individuals behave, think, and act, they are key for successful entrepreneurial activities. While existing literature mainly analyzes the influence of the task-related construct of entrepreneurial self-efficacy, we take a different perspective and investigate, based on a representative sample of 1, 405 German business founders, how the personality characteristic of generalized self-efficacy influences start-up performance as measured by a broad set of business outcomes up to 19 months after business creation. Outcomes include start-up survival and entrepreneurial income, as well as growthoriented outcomes such as job creation and innovation. We find statistically significant and economically important positive effects of high scores of self-efficacy on start-up survival and entrepreneurial income, which become even stronger when focusing on the growth-oriented outcome of innovation. Furthermore, we observe that generalized self-efficacy is similarly distributed between female and male business founders, with effects being partly stronger for female entrepreneurs. Our findings are important for policy instruments that are meant to support _rm growth by facilitating the design of more target-oriented offers for training, coaching, and entrepreneurial incubators.
    Keywords: Entrepreneurship, firm performance, general self-efficacy, survival, job creation, innovation
    JEL: L26 M13 D91
    Date: 2023
  4. By: Wim Naudé (RWTH Aachen University and IZA Institute of Labor Economics, Germany; and African Studies Centre, University of Leiden, The Netherlands. Distinguished Visiting Professor, University of Johannesburg); Lelys Ernesto Amorós (EGADE Business School, Tecnol ́ogico de Monterrey, Mexico City, Mexico); Tilman Brück (Humboldt-University of Berlin, Germany; ISDC - International Security and Development Center, Berlin, Germany; and Leibniz Institute of Vegetable and Ornamental Crops, Großbeeren, Germany)
    Abstract: This paper investigates the relationship between state-based conflict and entrepreneurship. From a survey of the existing literature, we formulate two hypotheses: (1) state-based conflict has a negative association with productive and opportunity-motivated forms of entrepreneurship, and (2) a positive association with unproductive and necessity-motivated forms of entrepreneurship. We test these hypotheses by drawing on several state-based conflict and entrepreneurship measures, using appropriate estimators, and employing robustness checks. The evidence supports our hypotheses. Necessity-motivated start-up entrepreneurship is, on average, almost three times higher in countries in conflict than in countries not in conflict. Development level matters. In countries with less unemployment, more finance, and higher levels of physical, human capital and GDP, entrepreneurship is more resilient, and the ratio of female-to-male entrepreneurs in opportunity-motivated entrepreneurship higher.
    Keywords: Entrepreneurship, conflict, war, small business, employment
    JEL: J23 L26 M13 N40 O11 O17
    Date: 2023–02
  5. By: Anthony Krakah (Ghana Statistical Service); Gonzague Vannoorenberghe (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We analyze how the spatial concentration of economic activity affects innovation among firms in Ghana. We use the 2014 census of all establishments to map economic activity at a precise geographic level and the responses to a detailed survey of more than 5000 firms to capture measures of innovation and firm-level characteristics. We find a strong positive effect of the overall density of economic activity on innovation (urbanization economies) but a negative effect of the density of employment in an establishment’s sector (localization economies). Several questions in the survey allow us to address the issue of endogeneity and shed some light on the mechanisms. We control for many firm characteristics and confirm our results on a subsample of establishments declaring that their location is that of their founder’s origin, i.e. firms with a plausibly exogenous geographic location. We find that firms in regions with denser economic activity report less problems to access funding and knowledge, while the presence of firms in the same sector is associated with more uncertainty about the gains from innovating.
    Keywords: innovation, development, localization, urbanization, externalities, Ghana
    JEL: R10 R11 R12 O14 O18
    Date: 2023–02–13
  6. By: Akimova V.V. (The Russian Presidential Academy Of National Economy And Public Administration); Mikhaylov A.A. (The Russian Presidential Academy Of National Economy And Public Administration); Semyonova R.I. (The Russian Presidential Academy Of National Economy And Public Administration); Zemtsov S.P. (The Russian Presidential Academy Of National Economy And Public Administration)
    Abstract: Economic activity is distributed unevenly, following human resettlement, so that high-concentration zones (large cities urban agglomerations) are combined with uninhabited lands. The relevance of the work is due to the close attention of the scientific community and governments to regional development. Scientific novelty is associated with the generalization of the factors of regional development. The objective of the work was to analyze the key theoretical approaches and empirical studies of the regional development factors. The text describes the main models of regional growth, analyzes the role of basic determinants, with a separate chapter devoted to entrepreneurial capital. In the course of the work, the following findings and conclusions were obtained: studies of regional development are widely covered in the literature, with several dozen regional development theories currently distinguished; each theory characterizes various aspects of this process. The determinants of regional development can be subdivided into factors of the first nature (those of natural origin) and the second nature (those of anthropogenic origin). The prospects and further areas of the study include an econometric assessment of the regional development factors in Russia (such as human capital, institutional conditions, technological development, etc.) and identification of new factors (embeddedness of entrepreneurship, influence of digital technologies, etc.). The paper is based on the materials of research work carried out in accordance with the RANEPA State Assignment for 2021.
    Keywords: regional development, regional growth, economic development, spatial policy, entrepreneurship
  7. By: Sonia Baijot (UJML3 Droit - Université Jean Moulin Lyon 3 - Faculté de Droit - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon); Charlotte Le Chapelain (UJML3 Droit - Université Jean Moulin Lyon 3 - Faculté de Droit - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon, MSH-LSE - Maison des Sciences de l’Homme Lyon Saint-Etienne (MSH Lyon St-Etienne) - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Nineteenth-century businesswomen were almost entirely neglected, the historiography having adopted the hypothesis of the withdrawal of women from the business sphere after the eighteenth century. A growing body of literature is challenging this view, claiming that women did in fact actively contribute to the industrialization process and occupied key positions as investors and entrepreneurs, and revealing the constant and non-negligible presence of women at the head of businesses. This article reviews recent literature on women entrepreneurship in the nineteenth century. On the one hand, we analyze the reasons invoked by recent studies in order to explain why female entrepreneurship has so long remained ignored. The separate spheres ideology, the rise of industrialization, legal systems, the narrow definition of entrepreneurship and the issue of the sources might have contributed to maintain the idea that women would have withdrawn from business. On the other hand, we review the methods used in the recent revisionist literature in order to identify women entrepreneurs in the historical records and to assess the importance of their participation in entrepreneurial activities. Whereas some sources (tax rolls, censuses, directories, articles of association, etc.) help drawing general conclusions about female entrepreneurship supporting quantitative research, others (private family papers and objects, newspapers and advertisements, public and legal records) are particularly helpful for qualitative investigations permitting to draw in-depth portraits of these women.
    Abstract: Une littérature récente remet en question le présupposé, dominant dans l'historiographie, selon lequel les femmes se seraient retirées du monde des affaires au XIXe siècle. Elle montre en effet que l'entrepreneuriat féminin n'a pas disparu au XIXe siècle. Les femmes ont activement contribué au processus d'industrialisation, à des postes clés, en tant qu'investisseurs et en tant qu'entrepreneurs. Cette revue de littérature fait, d'une part, le bilan des facteurs d'invisibilisation des femmes dans l'historiographie traditionnelle, tel qu'invoqués par les récents travaux. L'idéologie des sphères distinctes, le développement du capitalisme industriel, les droits nationaux, la définition restrictive de l'entrepreneuriat ou encore le problème des sources sont invoqués comme ayant contribué à entretenir l'idée que les femmes se seraient retirées du monde des affaires au XIXe siècle. Par ailleurs, afin de délivrer des pistes de recherche et des outils pour de futurs travaux, cette revue de littérature présente les sources et les méthodes utilisées dans les récentes études. Alors que certaines sources (rôles d'imposition, recensements, annuaires, actes de sociétés, etc.) permettent de dresser des conclusions générales sur les femmes en affaires et viennent plutôt soutenir des recherches quantitatives, d'autres (documents et objets privés, articles de journaux et publicités, documents publics et légaux) sont plutôt appropriées aux recherches qualitatives et permettent de dresser un portrait approfondi de ces femmes.
    Keywords: Female entrepreneurship, nineteenth century, separate spheres ideology, sources, methods
    Date: 2022–09–01
  8. By: Kata Fredheim (Stockholm School of Economics in Riga; Baltic International Centre for Economic Policy Studies); Marija Krumina (Baltic International Centre for Economic Policy Studies); Anders Paalzow (Stockholm School of Economics in Riga; Baltic International Centre for Economic Policy Studies); Zane Varpina (Stockholm School of Economics in Riga; Baltic International Centre for Economic Policy Studies)
    Abstract: Research shows that return migrants have a higher propensity to set up an entrepreneurial activity or be self-employed compared to non-migrants. We take a multidisciplinary approach and empirically study the case of Latvia as a migration donor country to learn how re-migrants participate in entrepreneurship back at home. We are interested if foreign experience can be seen as a vehicle for entrepreneurial activity and if it is worth looking at return migrants as agents of business growth and innovation. Not only we measure the fact of being entrepreneurial, but also explore sources that contribute to the higher propensity, attitudes to creating own business venture, level of ambitions and population sentiment towards entrepreneurs. Based on a nationally representative adult population survey of 8000 observations, we find that early-stage entrepreneurial activity, established business ownership as well as intrapreneurship for return migrants exceed that of non-migrant population. We find that self-perceived capabilities to start business is higher for those who have lived abroad, and fear of failure is lower; re-migrants also have better businesses networks and have higher growth and export ambitions. The return migrant entrepreneurship in Latvia is not necessity driven, rather motivated by opportunities. Migration experience, length of stay aboard and capital accumulated abroad are found to be significant predictors of probability to become entrepreneur when controlled for socioeconomic and personal factors.
    Date: 2022–08
  9. By: Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu
    Abstract: Entrepreneurship is an important determinant of innovation and growth with an uneven spatial distribution. In addition, the mechanism of entrepreneurship is affected by administrative hierarchies. However, the driving forces behind the spatial differences are not clear. Therefore, this study aims to examine the key determinants of entrepreneurship by clarifying the roles of localisation economies and intellectual property rights (IPRs) protection from 2008 to 2017 using a Bayesian analysis of multi-level spatial correlation. The empirical results indicate that localisation economies and IPRs protection have a major influence on entrepreneurship. In particular, although it is insignificant, the role of localisation economies at prefecture level is important, because the impact of supplier linkages at provincial level is negative. The effects of IPRs protection at both prefecture and provincial levels are significant in all the models, and its effect increases with the improvement in model performance. Moreover, these determinants vary across different spatial scales.
    Keywords: entrepreneurship; IPRs protection; localisation economies; multi-level models; spatial random effects; 51808392; 72173133; EP/R035148/1; chool Funding from the University of Westminster; and National Conditions Research Project of Research Institute for Eco-civilization; Chinese Academy of Social Sciences (Taicang 2022) .
    JEL: J1 C1
    Date: 2022–06–01
  10. By: Heierhoff, Sebastian; Reher, Alina; Slamka, Jessica
    Abstract: Digital innovations are not only associated with opportunities for value creation but also lead to threats, for example, additional cybersecurity risks. Dealing with the conflicting requirements of innovations and cybersecurity can lead to a trade-off for organizations that companies setting up innovation units outside their core organization need to address. We conducted a cross-industry interview study to investigate the impact of organizational design of innovation units on the consideration of cybersecurity. Our results, embedded in Galbraith’s star model, reveal five types of innovation units and three patterns of organizational design that impact this consideration. The effect of these patterns ranges from an ill- or over-consideration to a cybersecurity-innovation equilibrium. Thereby, we extend the existing literature on the trade-off of innovation and cybersecurity by organizational design considerations regarding strategy, structure, and processes. This theoretical contribution has implications for the organizational design of innovation units in practice.
    Date: 2022–12–12
  11. By: Lily Davies (CPB Netherlands Bureau for Economic Policy Analysis); Mark Kattenberg (CPB Netherlands Bureau for Economic Policy Analysis); Benedikt Vogt (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Evaluations of support measures for companies often require a good assessment of the viability of firms or the probability that a firm will exit the market. On March 17, 2020, a lockdown and associated social-restriction measures were announced, which hit specific in the economy severely. To compensate companies and the self-employed for the loss of income, an extensive package of support measures has been designed. These support measures had hardly any restrictions, because they had to be paid out quickly. This raises the question whether unhealthy companies have made disproportionate use of support and to what extent these support measures have kept viable or non-viable companies afloat. In this paper, we use machine learning techniques to predict whether a company would have left the market in a world without corona. These predictions show that unhealthy companies applied for support less often than healthy companies. But we also show that the COVID-19 support has prevented most exits among unhealthy companies. This indicates that the corona support measures have had a negative impact on productivity growth.
    JEL: C18 E61 E65 G33
    Date: 2023–03
  12. By: Goodhart, Charles A.E.; Tsomocos, Dimitrios P.; Wang, Xuan
    Abstract: How should the government support small and medium-sized enterprises amid a pandemic crisis while balancing the trade-off between short-run stabilization and long-run allocative efficiency? We develop a two-sector equilibrium model featuring small businesses with private information on their likely future success and a screening contract. Businesses in the sector adversely affected by a pandemic can apply for government loans to stay afloat. A pro-allocation government sets a harsh default sanction to deter entrepreneurs with poorer projects, thereby improving long-run productivity at the cost of persistent unemployment, whereas a pro-stabilization government sets a lenient default sanction. Interest rate effective lower bound leads to involuntary unemployment in the other open sector and shifts the optimal default sanction to a lenient stance. The rise in firm markups exerts the opposite effect. A high creative destruction wedge polarizes the government’s hawkish and dovish stances, and optimal default sanction is more lenient, exacerbating resource misallocation. The model illuminates how credit guarantees might be structured in future crises.
    JEL: J1
    Date: 2023–01–23
  13. By: Angélique Breuillot (MMU - Manchester Metropolitan University); Rachel Bocquet (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Véronique Favre-Bonté (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Despite an increasing number of studies identifying factors that influence the internationalization process for early internationalizing firms (EIFs), it remains unclear which of these numerous factors could play a strategic role and, more specifically, when. This paper develops a new conceptual framework anchored in the resource-based view to identify strategic resources that can explain EIFs' internationalization process accurately over time. Building on a systematic literature review based on 102 papers covering a period of 29 years, we methodically present a phase-by-phase observation of EIFs' internationalization process to identify the strategic relevance of different influential resources. The results highlight the importance of the shift from individual to organizational resources, which occurs at a critical phase of transition from the entry to the post-entry phase. Studying the evolution of strategic resources along four phases allows us to determine that the progress of EIFs through the phases of their internationalization process is closely linked to their resources' development process. This study suggests some promising research avenues, at theoretical and methodological levels, and results in a series of concrete recommendations intended for entrepreneurs and/or managers of EIFs.
    Abstract: Malgré le nombre croissant de publications sur les facteurs influençant le processus d'internationalisation des entreprises à internationalisation précoce (EIP), il reste difficile de déterminer lesquels pourraient jouer un rôle stratégique, et surtout à quel moment du processus. Cet article développe un modèle conceptuel novateur ancré dans la théorie basée sur les ressources permettant d'identifier précisément les ressources stratégiques qui favorisent la soutenabilité du processus d'internationalisation des EIP dans le temps. À l'aide d'une revue systématique comprenant 102 papiers couvrant une période de 29 ans, nous identifions les ressources stratégiques à la progression des EIP à travers les quatre phases caractérisant leur processus d'internationalisation. Les résultats montrent également l'importance du passage des ressources individuelles aux ressources organisationnelles en phase de transition, située entre la phase d'entrée à l'international et la phase de post-entrée. En portant l'accent sur le lien étroit entre le développement de certaines ressources et la progression des EIP à travers le processus d'internationalisation, cet article propose des pistes de recherches futures prometteuses, tant au niveau théorique que méthodologique, et aboutit à une série de recommandations concrètes à destination des entrepreneurs et/ou des managers d'EIP.
    Keywords: international entrepreneurship, early internationalizing firms, internationalization process, resource-based view, systematic review
    Date: 2022

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